The financial markets reacted with sighs of relief, followed by more than a little head-scratching.

At first, investors were heartened by the simple fact that an agreement had been reached. But the size and scope of the rescue effort for Greece was generally larger than expected. The deal involves lowering interest rates and extending maturities on existing bailout loans, as well as more favorable terms for future loans from the EU stability fund.

"What makes these agreements stand out from other deals is that this one has a semblance of being preemptive," said Ashraf Laidi, chief executive of Intermarket Strategy. "As opposed to a reactionary, last-minute deal that aims to prevent bond spreads from soaring."

But key elements of the plan remain unclear, including how the involvement of private sector banks and investors to help lower Greece's debt load will affect the nation's credit rating.

Under the terms of the debt reduction plan, banks and private sector investors will voluntarily choose from a menu of four options to rollover Greek bonds into longer-dated maturities or swap them for higher-rated securities.

The big ratings agencies had warned that any losses by private sector holders of Greek debt, even on a voluntary basis, would be considered a form of default. That raised worries about a potential meltdown in the market similar to the one caused by Lehman Brothers' collapse.

Fitch Ratings was the first to weigh in on the issue, saying it would consider Greece to be in "restricted default" and would put a default rating on Greek bonds once investors took part in the plan.

The agency said it would then assign a new "post-default rating" to Greece and its bonds "once the default event is cured" and the bondholders have been given replacement assets.

The big challenge, economists say, is how to revive growth in troubled European economies so that debts and deficits can be resolved organically.

Jonathan Loynes, an economist at Capital Economics, said the new measures include "some significant advances" in the policy response to the debt crisis.

"But once the dust settles, the markets will surely return to the question of whether the package really addresses the fundamental economic and fiscal challenges facing both Greece and the euro zone in general," he said. "They will probably conclude that the answer is no."